Chicago native Mariam Khan never considered Islamic banking until her husband moved the family to Dubai in 2007. But the 36-year-old housewife is a believer now as the Western debt crisis deepens. Her husband opened a family account with HSBC Amanah, the Islamic arm of international bank HSBC. \"When I look at the damage that an interest-based system has done to the US and Europe, I can see why God forbids riba [interest] in Islam,\" she said. \"I\'m not particularly conservative as a Muslim but I definitely feel safer within Islamic banking.\" It is a sentiment that proponents of Islamic finance, which is based on religious principles including bans on interest and pure monetary speculation, hope will spur unprecedented growth of their industry as a safer, more stable alternative to conventional finance. Article continues below Bahrain\'s central bank governor Rashid Mohammad Al Maraj said last week that Islamic finance had an opportunity to attract not only customers in its traditional areas, the Gulf and Muslim parts of Asia, but also investors around the world who had been hurt by the turmoil in mainstream capital markets. \"It should provide the industry with a sustained period of growth for the next decade,\" he said. Ashar Nazim, Islamic financial services leader at consultants Ernst & Young, said the Occupy Wall Street movement in the United States showed mounting public anger about inequality in the capitalist system. Gaining market share This could help Islamic institutions gain market share by emphasising Islam\'s preference for an equitable distribution of wealth and dislike of excessive financial leverage, he said. It is still unclear, however, how much of the recent growth of Islamic finance is due to its merits — and how much is simply due to a temporary flight from conventional finance which could reverse when global markets eventually stabilise. With its assets estimated to total nearly $1 trillion globally, Islamic finance remains tiny compared to conventional finance with its tens of trillions of dollars. The market in Islamic bonds (sukuk), is believed to total about $50 billion, roughly one per cent of global bond issuance. But proponents of Islamic finance can point to impressive gains. Nazim said it had expanded at a compound annual growth rate of 20 per cent over the past three years, compared to nine per cent for conventional finance. That performance gap has probably widened further in the last two months as much new business in the West has ground to a halt. Deutsche Bank, a pillar of traditional banking, estimated in a report last month that Islamic finance would almost double to $1.8 trillion in assets by 2016 as stagnant conventional lending pushed companies to seek alternative financing methods. As much of the international corporate bond market has frozen up over the last six months, most bond issuance by Gulf companies has been in the form of sukuk. Dubai\'s fast-growing Emirates airline said it was looking at the Islamic finance market to fund aircraft deliveries as European banks backed out of plane deals because of the Eurozone debt crisis. Some big Western banks, facing tough conditions in the funding markets on which they have long relied, are also turning to sukuk. HSBC issued a $500 million sukuk in May and Goldman Sachs announced a $2 billion sukuk programme last month. French bank Credit Agricole has said it is considering issuing an Islamic bond or creating a wider sukuk programme that could lead to several issues. This year\'s Arab Spring uprisings in North Africa have installed governments which are expected to promote Islamic finance more enthusiastically than their authoritarian predecessors, partly because it can help them attract Islamic investment funds in the Gulf. And Islamic finance is spreading farther afield. Senegal is expected to hold investor meetings before the end of the year to issue its first sovereign sukuk, while Nigeria said in June that it planned to issue a debut sovereign sukuk within 18 months as part of efforts to boost Islamic banking in the country. Global turmoil In September, AK Bars Bank in Tatarstan became the first Russian bank to secure an Islamic loan, using the murabaha structure, in which the borrower essentially sells an asset to the lender to obtain funds and agrees to buy it back on a later date at a higher price. The past several years have exposed weaknesses in Islamic finance, however. The industry claims sukuk are safer than traditional bonds because they are effectively certificates of ownership in a real asset, not speculative instruments. The Dubai debt woes of 2009 showed this claim to be on shaky ground. Companies such as property developer Nakheel and Jebel Ali Free Zone raised funds through sukuk but were forced to restructure once they found themselves unable to repay creditors. Similarly, deposits in Islamic banks, which do not offer interest but may invest depositors\' money in relatively risk-free investments and give them a share of the profits, are supposed to be safer because of Islam\'s curbs on speculation. But Dubai Bank, an Islamic institution, ran into such serious debt problems that the Dubai government had to arrange for it to be taken over by a conventional bank. \"It\'s still unclear whether you can really say Islamic finance has tackled the leverage aspect,\" said Abdul Kadir Hussain, chief executive of Dubai-based Mashreq Capital. \"You still have companies that raise what ultimately constitutes debt at unsustainable levels through sukuk. Just because it is done in a technically Sharia-compliant manner using an asset to back it doesn\'t mean that you\'re not taking the same risk as conventional finance.\" That suggests Islamic finance may have succeeded this year not so much because it is seen as safe, but because of a lucky accident: it has access to billions of dollars of Islamic funds in the Gulf and southeast Asia, which have been hit less hard than other regions by global financial turmoil.